The Liberals’ recent federal budget offers generous tax credits for companies to bury carbon in the ground, but nothing if it is used for enhanced oil recovery..Budget 2022 included a refundable tax credit for carbon capture, utilization, and storage (CCUS) projects. From 2022-2030, the federal government will cover 60% of equipment costs for direct air capture, 50% for equipment costs of other kinds of CCUS, and 37.5% for equipment used to transport and store carbon dioxide..Richard Masson, executive fellow at the University of Calgary School of Public Policy, says the technology is proven..“We have very few things that we can do with a high level of assurance to reduce the greenhouse gas intensity of producing oil, particularly from the oil sands. We know carbon capture works. We’ve got examples of that in Saskatchewan and Alberta that have been running for years,” Masson said in an interview with Western Standard..“The question has always been can we pay for it. Getting the federal government to say it’s worth money to Canadians to capture this carbon is a vote of confidence in saying Canada is going to be a long term supplier to the world and we’re working hard to decarbonize.”.The budget estimates it will hand out a total of $1.1 billion in tax credits through 2025-26, then $1.5 billion annually through 2030. After that, the tax credits will be cut in half..Modular nuclear reactors will get a total of $120.6 million over five years to develop small modular nuclear reactors for industry. Henceforth, the Canadian Infrastructure Bank will invest in these reactors, clean fuel production, hydrogen production, and CCUS projects..The federal government wants greenhouse gas emissions 40% below 2005 levels by 2030 and net zero by 2050. Masson says such aggressive targets force the government to look past renewables..“We’re so far behind where we need to be to meet any of the targets that they’re setting. We need to do everything at the same time; and otherwise, we would have no hope of really moving the needle,” Masson said..Captured carbon can be used for enhanced oil recovery (EOR) to get more oil from wells that were otherwise past their practical use. Masson says projects already completed or in the works could mitigate “a vast amount of C02,” of roughly 14 million tonnes per year by 2030..The federal government made EOR projects ineligible for the tax credit, perhaps because their ability to extract more oil creates its own revenue stream. However Kevin Birn, an analyst at S&P Global, believes EOR is a legitimate way to reduce emissions..“Some people do see it as this life extender for fossil fuel extractions, and reality is a megaton avoided is a megaton avoided, whether it occurs from enhanced oil recovery or straight up sequestration,” Birn said an in interview with Western Standard..Masson expects industry will push the province of Alberta to give its own 25% tax credit for CCUS projects, especially since the province benefits more from royalties than the federal government. Birn says that scenario is believable..“These incentives are really needed if the government wants to accelerate the deployment of CCUS to achieve their emission reduction ambitions.”.Birn says the CCUS technologies developed for use in Canada could be useful elsewhere..“It’s going to have cost, but there’s also going to be opportunities. There’s a lot of companies being set up looking at ways to reduce emissions, but also there’s a business model there. And there’s exportable technology,” Birn said..“There’s a lot of policy work that still has to happen, but there is opportunity if we can work through this and get to, frankly, what the energy sector has been looking for for a long time, which is policy certainty. And that’s good for multiple sectors in our economy.”.Lee Harding is a Western Standard contributor from Saskatchewan.
The Liberals’ recent federal budget offers generous tax credits for companies to bury carbon in the ground, but nothing if it is used for enhanced oil recovery..Budget 2022 included a refundable tax credit for carbon capture, utilization, and storage (CCUS) projects. From 2022-2030, the federal government will cover 60% of equipment costs for direct air capture, 50% for equipment costs of other kinds of CCUS, and 37.5% for equipment used to transport and store carbon dioxide..Richard Masson, executive fellow at the University of Calgary School of Public Policy, says the technology is proven..“We have very few things that we can do with a high level of assurance to reduce the greenhouse gas intensity of producing oil, particularly from the oil sands. We know carbon capture works. We’ve got examples of that in Saskatchewan and Alberta that have been running for years,” Masson said in an interview with Western Standard..“The question has always been can we pay for it. Getting the federal government to say it’s worth money to Canadians to capture this carbon is a vote of confidence in saying Canada is going to be a long term supplier to the world and we’re working hard to decarbonize.”.The budget estimates it will hand out a total of $1.1 billion in tax credits through 2025-26, then $1.5 billion annually through 2030. After that, the tax credits will be cut in half..Modular nuclear reactors will get a total of $120.6 million over five years to develop small modular nuclear reactors for industry. Henceforth, the Canadian Infrastructure Bank will invest in these reactors, clean fuel production, hydrogen production, and CCUS projects..The federal government wants greenhouse gas emissions 40% below 2005 levels by 2030 and net zero by 2050. Masson says such aggressive targets force the government to look past renewables..“We’re so far behind where we need to be to meet any of the targets that they’re setting. We need to do everything at the same time; and otherwise, we would have no hope of really moving the needle,” Masson said..Captured carbon can be used for enhanced oil recovery (EOR) to get more oil from wells that were otherwise past their practical use. Masson says projects already completed or in the works could mitigate “a vast amount of C02,” of roughly 14 million tonnes per year by 2030..The federal government made EOR projects ineligible for the tax credit, perhaps because their ability to extract more oil creates its own revenue stream. However Kevin Birn, an analyst at S&P Global, believes EOR is a legitimate way to reduce emissions..“Some people do see it as this life extender for fossil fuel extractions, and reality is a megaton avoided is a megaton avoided, whether it occurs from enhanced oil recovery or straight up sequestration,” Birn said an in interview with Western Standard..Masson expects industry will push the province of Alberta to give its own 25% tax credit for CCUS projects, especially since the province benefits more from royalties than the federal government. Birn says that scenario is believable..“These incentives are really needed if the government wants to accelerate the deployment of CCUS to achieve their emission reduction ambitions.”.Birn says the CCUS technologies developed for use in Canada could be useful elsewhere..“It’s going to have cost, but there’s also going to be opportunities. There’s a lot of companies being set up looking at ways to reduce emissions, but also there’s a business model there. And there’s exportable technology,” Birn said..“There’s a lot of policy work that still has to happen, but there is opportunity if we can work through this and get to, frankly, what the energy sector has been looking for for a long time, which is policy certainty. And that’s good for multiple sectors in our economy.”.Lee Harding is a Western Standard contributor from Saskatchewan.
